Weekly Feed Market Commentary

Published 25 March 15

Feed Grains

March so far has been a bullish month for UK grain prices and last week was no exception. New crop (Nov-15) futures in London closed at £132.25/t yesterday (24 Mar) – up £2.60/t on the week and a £6.25/t rise over the month so far. Although Paris maize futures have been flat in euro terms, in sterling terms the Nov-15 contract rose around £3/t on the week to Tuesday with the euro gaining some strength. Despite heavy supplies of the old crop, it is the new crop (harvest 2015) which is now driving markets for the time being. Any rise in the new crop is taking old crop values with it, essentially due to a function of the price carry between old and new.

Further volatility is around the corner with quarterly US stocks and prospective planting data out from the USDA on Tuesday (31 March). A year-on-year fall in the US maize area is anticipated, but this may be offset by the emergence of warm conditions which will be supportive of maize plantings, ahead of the later sown soyabean crop. Nonetheless, as with the fears surrounding potential damage to US winter wheat from these same warm, dry conditions, these new crop rumours remain just that at this stage. Sentiment, and market direction, could change just as quickly as weather conditions.

Protein Meal

Oilmeal prices were unchanged or higher in the UK last week. UK rapemeal (34%, ex-mill Erith, March delivery) £186/t as at 20 March, up £5/t on the previous week, while Brazilian soyameal, (48%, ex-store Liverpool, March delivery) was unchanged at £349/t. The reversal of recent currency trends in the week, with sterling weakening against the euro but strengthening against the US dollar, drove the direction of UK prices against a relative lack of supportive news in the oilseeds complex.

One area of concern had been the potential impact of flooding in Argentina earlier this month. However, last week the Buenos Aires Grain Exchange reported that just 1% of the soyabean area was affected. While the record South American soyabean crops are not yet confirmed, their realisation is getting ever nearer. With a seasonal dip often seen following the confirmation of the South American soyabean harvest, the current relative stability in prices shouldn’t be taken for granted.

Market attention is increasingly fixed on the potential 2015 US soyabean area. The first indication will be available in the USDA report mentioned above (grains section). While indications suggest there will be a smaller rapeseed area in Europe, a historically large US soyabean area is expected given the lower costs in growing the crop compared with maize - the question for markets is just how large?